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News Report: BBC’s ‘critical’ commercial activities The success of the BBC’s commercial activities will be critical to the BBC and licence fee payers in the immediate years ahead, according to the UK’s National Audit Office (NAO) which has published its first report on the BBC’s commercial activities, following an expansion in its statutory powers under the BBC Royal Charter. These activities generated revenue of £1.2 billion (€1.6bn) in 2016-17 and employed 4,900 staff. Overall, the BBC’s total revenue from its commercial subsidiaries was broadly stable at more than £1.1 billion in each of the five years from 2012-13 to 2016-17. However, among the subsidiaries, only Worldwide made profits throughout the five years. Its profit after tax was £40.4 million in 2016-17, 68 per cent lower than in 2012-13 (£127.6 million), though this was largely due to two one-off costs incurred in 2016-17. The BBC’s main subsidiaries operate in a rapidly changing and increasingly competitive market. Audiences are increasingly accessing content digitally, including via fast-growing global subscription video on demand services such as Netflix. The BBC’s commercial subsidiaries face increased competition and costs to secure the valuable Intellectual Property (IP) that underpins the contemporary media business model. In response, Worldwide has entered into more co-productions, partnerships with other international companies, and other projects. These actions could deliver greater The BBC must notify Ofcom if any commercial line of business is not making a commercial rate of return. financial rewards for the company, and the BBC as a whole, but also entail greater risks. Simultaneous with these developments, advertisers are spending more of their budgets online, putting pressure on the traditional business model for running TV channels, a development that affects both Worldwide and Global News. A principal focus for Ofcom, the BBC’s regulator since 2017, will be the relationship between the BBC’s licence fee-funded PSB divisions and its commercial subsidiaries. The BBC is required to ensure that its commercial activities do not, as a result of their relationship with UK PSB divisions, distort the market or gain an unfair competitive advantage. The BBC must notify Ofcom if any commercial line of business is not making a commercial rate of return. Ofcom can also assess material changes in the BBC’s commercial activities. It is currently considering the BBC’s plan to merge Worldwide and Studios in April 2018. The BBC Board has already determined that this development is not material, but Ofcom may reach a different view. The BBC wants to merge Worldwide and Studios to create a more integrated commercial business in order to compete in the increasingly competitive and consolidated global market. The NAO highlights a number of challenges and risks the BBC faces. It is developing new BBC-owned IP, primarily in the form of TV series and formats, to drive growth. It will need to manage risk carefully to ensure that the funds it invests in such projects have the greatest impact possible in a crowded marketplace. The NAO has signalled that the BBC may also wish to consider whether Worldwide’s financial returns target, of £1.2 billion over five years, remains relevant, given the planned Worldwide and Studios merger and other changes that have occurred. “The BBC’s expanding commercial activities are undertaken on behalf of licence fee payers and exploit the significant assets that licence fee payers have paid for,” advised Amyas Morse, head of the National Audit Office. “The public interest in holding the BBC to account for these activities is therefore clear. Granting the NAO access to the commercial subsidiaries for the first time is an important step in improving the transparency of the BBC’s operations. We will continue to scrutinise the BBC’s commercial activities to inform Parliament and to help the BBC optimise the value for money it delivers.” Spanish anti-piracy arrests Europol and Spain’s Cuerpo Nacional de Policía (Spanish National Police) have arrested six individuals in what they suggest is a “big hit” to illegal TV streaming networks. The Spanish National Police, supported by Europol’s Intellectual Property Crime Coordinated Coalition (IPC³), arrested six individuals from a crime ring suspected of selling illegal television signals from more than 14,000 international points of sale. The signals were sold through a company which designed the application needed to illegally stream films, television series and sport events. The investigation began when copyright protection trade body Entidad de Gestión de Derechos de los Productores Audiovisuales (EGEDA), multimedia communications group Mediapro and the Spanish football league La Liga filed a complaint with the police. During the course of the investigation, police officers discovered a company, based in Galicia, Spain which was suspected of transmitting pay-TV channels signals illegally. The company developed both the decoder device and the application needed to illegally access the paid channels. The decoder was sold for €120 and the server to transmit the illegal signal was hosted in France and controlled from the business in Spain. In total, eight house searches were carried out in Spain, resulting in the arrest of six members of the organised crime group and the seizure of 4,600 IT devices. On the day of the raids, Europol supported the investigation on the ground by deploying an analyst and a specialist to Spain equipped with a mobile office and a data extraction device. This allowed for realtime information exchange and cross-checks of the data gathered during the course of the action against Europol’s databases. 12 EUROMEDIA News Report: BBC’s ‘critical’ commercial activities T he success of the BBC’s commercial financial rewards for the company, and the activities will be critical to the BBC and BBC as a whole, but also entail greater risks. licence fee payers in the immediate Simultaneous with these developments, years ahead, according to the UK’s National advertisers are Audit Office (NAO) which has published its spending more of first report on the BBC’s commercial activities, their budgets online, following an expansion in its statutory powers putting pressure under the BBC Royal Charter. on the traditional These activities generated revenue of £1.2 business model for billion (€1.6bn) in 2016-17 and employed running TV channels, 4,900 staff. a development Overall, the BBC’s total revenue from its that affects both commercial subsidiaries was broadly stable at Worldwide and Global more than £1.1 billion in each of the five years News. from 2012-13 to 2016-17. However, among A principal focus the subsidiaries, only Worldwide made profits for Ofcom, the BBC’s throughout the five years. Its profit after tax regulator since 2017, will be the relationship was £40.4 million in 2016-17, 68 per cent between the BBC’s licence fee-funded PSB lower than in 2012-13 (£127.6 million), though divisions and its commercial subsidiaries. The this was largely due to two one-off costs BBC is required to ensure that its commercial incurred in 2016-17. activities do not, as a result of their The BBC’s main subsidiaries operate in a relationship with UK PSB divisions, distort rapidly changing and increasingly competitive the market or gain an unfair competitive market. Audiences are increasingly accessing advantage. The BBC must notify Ofcom if any content digitally, including via fast-growing commercial line of business is not making a global subscription video commercial rate of return. The BBC must on demand services such Ofcom can also assess as Netflix. The BBC’s material changes in the BBC’s notify Ofcom if commercial subsidiaries any commercial commercial activities. It is face increased competition currently considering the BBC’s line of business and costs to secure the plan to merge Worldwide and is not making a valuable Intellectual Studios in April 2018. The BBC commercial rate Board has already determined Property (IP) that underpins the contemporary media that this development is not of return. business model. In response, material, but Ofcom may reach Worldwide has entered into a different view. The BBC wants more co-productions, partnerships with to merge Worldwide and Studios to create a other international companies, and other more integrated commercial business in order projects. These actions could deliver greater to compete in the increasingly competitive and Spanish anti-piracy arrests Europol and Spain’s Cuerpo Nacional de Policía (Spanish National Police) have arrested six individuals in what they suggest is a “big hit” to illegal TV streaming networks. The Spanish National Police, supported by Europol’s Intellectual Property Crime Coordinated Coalition (IPC³), arrested six individuals from a crime ring suspected of selling illegal television signals from more than 14,000 international points of sale. The signals were sold 12 EUROMEDIA through a company which designed the application needed to illegally stream films, television series and sport events. The investigation began when copyright protection trade body Entidad de Gestión de Derechos de los Productores Audiovisuales (EGEDA), multimedia communications group Mediapro and the Spanish football league La Liga filed a complaint with the police. During the course of the investigation, police officers discovered a company, based in Galicia, Spain which was consolidated global market. The NAO highlights a number of challenges and risks the BBC faces. It is developing new BBC-owned IP, primarily in the form of TV series and formats, to drive growth. It will need to manage risk carefully to ensure that the funds it invests in such projects have the greatest impact possible in a crowded marketplace. The NAO has signalled that the BBC may also wish to consider whether Worldwide’s financial returns target, of £1.2 billion over five years, remains relevant, given the planned Worldwide and Studios merger and other changes that have occurred. “The BBC’s expanding commercial activities are undertaken on behalf of licence fee payers and exploit the significant assets that licence fee payers have paid for,” advised Amyas Morse, head of the National Audit Office. “The public interest in holding the BBC to account for these activities is therefore clear. Granting the NAO access to the commercial subsidiaries for the first time is an important step in improving the transparency of the BBC’s operations. We will continue to scrutinise the BBC’s commercial activities to inform Parliament and to help the BBC optimise the value for money it delivers.” suspecte Ʌ͵ѥ)QX́ͥ))Q)ٕѠ)ѡ)٥ѡ)ѥ)Ѽ)䁅)ѡ̸Q)ȁ݅́ͽȃ )ѡ͕ٕȁѼɅ͵Ёѡ)ͥ݅́ѕ)Ʌɽɽ)ѡͥ́M)%ѽхЁ͔)͕ɍ́ݕɔɥ)Mɕձѥѡ)ɕЁͥ́)ѡɝ͕ɥɽ)ѡ͕ɔа%P)٥̸)=ѡ䁽)ѡɅ̰ɽ)ѕѡ)ٕѥѥ)ѡɽչ)䁑她)ЁЁѼ)MեݥѠ)фɅѥ)٥Q́ݕȁɕ)ѥɵѥ፡)ɽ̵́ѡф)ѡɕɥѡ͔)ѡѥЁɽe)х̸͕